exv10w1
Exhibit 10.1
PARK-OHIO INDUSTRIES, INC.
ANNUAL CASH BONUS PLAN
1. Purpose. The purpose of the Annual Cash Bonus Plan (the “Plan”) is to attract and retain
key executives for Park-Ohio Industries, Inc., an Ohio corporation (the “Company”), and its
Subsidiaries and to provide such persons with incentives for superior performance. Incentive Bonus
payments made under the Plan are intended to constitute qualified “performance-based compensation”
for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, and Section
1.162-27 of the Treasury Regulations promulgated thereunder, and the Plan shall be construed
consistently with such intention.
2. Definitions. As used in this Plan,
“Board” means the Board of Directors of the Company.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Committee” means the Compensation Committee of the Board or any other committee appointed by
the Board to administer the Plan; provided, however, that in any event the Committee shall be
comprised of not less than two directors of the Company, each of whom shall qualify as an “outside
director” for purposes of Section 162(m) of the Code and Section 1.162-27(e)(3) of the Regulations.
“Eligible Executive” means the Company’s Chairman and Chief Executive Officer and any other
executive officer of the Company designated by the Committee.
“Incentive Bonus” shall mean, for each Eligible Executive, a bonus opportunity amount
determined by the Committee pursuant to Section 5 below.
“Management Objectives” means the achievement of a performance objective or objectives
established pursuant to this Plan for Eligible Executives. Management Objectives may be described
in terms of Company-wide objectives or objectives that are related to the performance of the
individual Eligible Executive or of the Subsidiary, division, department or function within the
Company or Subsidiary in which the Eligible Executive is employed. Management Objectives may be
measured on a relative or absolute basis. The Management Objectives shall be limited to specified
levels of, growth in or relative peer company performance in one or more or a combination of the
following: (i) earnings per share; (ii) earnings before interest, taxes, depreciation, and
amortization; (iii) earnings before interest and taxes; (iv) earnings before taxes; (v) return on
invested capital; (vi) return on total capital; (vii) return on assets; (viii) return on equity;
(ix) total shareholder return; (x) growth in net income, revenue, cash flow, or operating profit;
and/or (xi) productivity improvement.
“Regulations” mean the Treasury Regulations promulgated under the Code, as amended from time
to time.
“Subsidiary” means a corporation, partnership, joint venture, unincorporated association or
other entity in which the Company has a direct or indirect ownership or other equity interest.
3. Administration of the Plan. The Plan shall be administered by the Committee, which shall
have full power and authority to construe, interpret and administer the Plan and shall have the
exclusive right to establish Management Objectives and the amount of Incentive Bonus payable to
each Eligible Executive upon the achievement of the specified Management Objectives.
4. Eligibility. Eligibility under this Plan is limited to Eligible Executives designated by
the Committee in its sole and absolute discretion.
5. Awards.
(a) Not later than the 90th day of each fiscal year of the Company, the
Committee shall establish the Management Objectives for each Eligible Executive and the
amount of Incentive Bonus payable (or formula for determining such amount) upon full
achievement of the specified Management Objectives. The Committee may further specify in
respect of the specified Management Objectives a minimum acceptable level of achievement
below which no Incentive Bonus payment will be made and shall set forth a formula for
determining the amount of any payment to be made if performance is at or above the minimum
acceptable level but falls short of full achievement of the specified Management Objectives.
The Committee may not modify any terms of awards established pursuant to this section,
except to the extent that after such modification the Incentive Bonus would continue to
constitute qualified “performance-based compensation” for purposes of Section 162(m) of the
Code.
(b) The Committee retains the discretion to reduce the amount of any
Incentive Bonus that would be otherwise payable to an Eligible Executive (including a
reduction in such amount to zero).
(c) Notwithstanding any other provision of the Plan to the contrary, in no
event shall the Incentive Bonus paid to an Eligible Executive under the Plan for a year
exceed $3.0 million.
6. Committee Certification. As soon as reasonably practicable after the end of each fiscal
year of the Company, the Committee shall determine whether the Management Objective has been
achieved and the amount of the Incentive Bonus to be paid to each Eligible Executive for such
fiscal year and shall certify such determinations in writing.
7. Payment of Incentive Bonuses. Subject to a valid election made by an Eligible Executive
with respect to the deferral of all or a portion of his or her Incentive Bonus, Incentive Bonuses
shall be paid within 30 days after written certification pursuant to Section 6, but in no event
later than two and a half months from the end of the Company’s fiscal year.
8. No Right to Bonus or Continued Employment. Neither the establishment of the Plan, the
provision for or payment of any amounts hereunder nor any action of the Company, the Board or the
Committee with respect to the Plan shall be held or construed to confer upon any
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person (a) any legal right to receive, or any interest in, an Incentive Bonus or any other benefit
under the Plan or (b) any legal right to continue to serve as an officer or employee of the
Company or any Subsidiary of the Company.
9. Withholding. The Company shall have the right to withhold, or require an Eligible
Executive to remit to the Company, an amount sufficient to satisfy any applicable federal, state,
local or foreign withholding tax requirements imposed with respect to the payment of any Incentive
Bonus.
10. Nontransferability. Except as expressly provided by the Committee, the rights and
benefits under the Plan shall not be transferable or assignable other than by will or the laws of
descent and distribution.
11. Effective Date. Subject to its approval by the stockholders, this Plan shall become
effective May 26, 2011, and shall remain effective until the first shareholders’ meeting in 2016,
subject to any further stockholder approvals (or reapprovals) mandated for performance-based
compensation under Section 162(m) of the Code, and subject to the right of the Board to terminate
the Plan, on a prospective basis only, at any time.
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